1. Future options are particularly useful for offsetting risk created when a bank:

A.extends option-like commitments to bank customers.

• B.has the right to borrow at a fixed-rate in the future.
• C.has a loan portfolio of primarily fixed-rate loan products.
• D.is involved in gold and other inflation-hedging instruments.

2. Use this table to answer the following question.

First National Bank

Assets Liabilities

Rate-sensitive $20 million $50 million

Fixed-rate $80 million $40 million

Referring to the table, First National Bank has a gap of:

• A.-30.
• B.+30.
• C.60.
• D.0.